Negotiating a real estate deal can be fraught with issues in large part because everyone’s risk tolerance is different. Buyers and sellers often believe it is a win/lose proposition. Automatically assuming the other party is an adversary does not create the proper framework for compromise and deal making. And, even after the initial deal has been made, when something else goes south along the way, being adversaries will make those additional negotiations more difficult to work out. As a Certified Negotiation Expert* (CNE®) I have learned specific techniques to ensure that transactions become win/win opportunities. I find that thinking carefully about wants, needs, and desires can change how a negotiation comes together where risk and rewards are shared by all parties.
These are some of the questions I ask myself as I embark on a negotiation.
Why is it in their self-interest to do what I want them to do? What are their self-interests? Regardless of whether I am representing the buyer or the seller, seeing the situation from the other side’s point of view is important. Asking open-ended questions is a great way to obtain additional information on motivations I may not have considered.
How is my client’s offer unique? An offer is so much more than the dollar amount. Contracts have lots of variables that can sway the equation. I always ask “what in addition to the right price will influence your decision to accept the agreement?” Often, the closing date is very important to either side. Buying or selling a home can be stressful enough without additional complications for moving day.
How does my response compare so my offer looks best? For example, one thing I always look for is if the lender is local. It may seem like a small thing, however I have had numerous complications with lenders who don’t know and understand the particulars of the Lowcountry market. In North Carolina, the appraisal is done prior to the home inspection, while here, it is typically the opposite. One lender from another state told my seller she did not need to have a termite inspection because it was not a VA loan. I have dealt with multiple time zone issues and finally closed a 4pm closing at 8pm that evening. The loan officer was based in Utah but the funding was coming from Texas.
What can we trade or exchange of equal value? When parties are close, sometimes throwing in appliances that originally would not have conveyed or some patio furniture can do the trick. First-time homebuyers may be using most of their savings for the down payment. By making a full-price offer and asking for a contribution toward closing costs instead, sellers can net a comparable amount while raising the mortgage for the buyers by comparatively little.
What evidence or logic makes sense for them to agree with me? I prefer to make my own arguments and leave no doubt about my client’s intentions. Negotiation partners may still make assumptions on their own to be sure, but agents also sometimes negotiate harder with their clients than they do with the other party. I give them my ammunition to make my case for me.
*Fewer than 1% of real estate agents hold this designation across the country.